Chieftain Chatter
Season 5
Episode 174
Done deal…
After a 20 hour “love in” session in London it emerged that a consensus deal has been struck between the US and China that now just requires the blessing of Pres. Ping Pong and Teflon Don.
As usual the detail was sparse with US Commerce Secretary Howard Lunitick indicating a framework had been established. As part of the deal China has agreed to speed up shipments of critical minerals that are vital to the manufacture of microchips while the US will allow Chinese students to have some fun at US Colleges. Commentary from Chinese representatives seemed to support the optimism expressed by the US calling on both countries to take advantage of their trade negotiation mechanism to “improve consensus, reduce misunderstanding and strengthen cooperation.”
The arrangement allows the U.S. to charge a 55% tariff on imported Chinese goods which includes a 10% baseline "reciprocal" tariff, a 20% tariff for fentanyl trafficking and a 25% tariff reflecting pre-existing tariffs and China would charge a 10% tariff on U.S. imports. Let’s wait and see.
Surely taxing unrealised gains in Super is unconstitutional and just plain mean however, not to index them against inflation is just a blatant cash grab by a bland government with no opposition.
Targeted at SMSF’s and industry super funds where member balances exceed $3m the government has suggested the new imposition will only impact 80,000 taxpayers however it has been speculated this number could be as high as 500,000. As was the case with Gillard’s 15% Division 293 unindexed wealth tax in 2012 many multiple of Australian taxpayers were impacted than originally forecast. The largest Industry Fund Aware Super ($180 billion) indicated the majority of their 1.2m members balance are well under the threshold but the number is growing. As SMSF’s scramble to minimise the impact through various creative means prior to June 30 deadline the new tax looks like it will be levied for the 2025/2026 financial year.
Someone who the new super tax may impact is Gina Rinehart with her Roy Hill Iron Ore operation reporting a $3.23 billion net profit for 2023/24 (she should probably make her $27.500 concessional super contribution before Jume 30!) while Atlas made a mere $440m. Roy Hill is generating enough cash in 5 years to pay down the $10 billion debt facility. Hancock also announced the merger of her Atlas Iron and Roy Hill operations under the one banner of Hancock Iron Ore. Rinehart acknowledged announcement as from join venture partners in South Korea’s POSCO, Japan’s Marubeni and China Steel and commented “Finding partners to invest alongside Hancock Prospecting in our mega project Roy Hill 15 years ago was critical, and we would not be in the position we are in today, providing billions in tax revenue, and more billions to support local companies, without POSCO, Marubeni and China Steel partnering and investing substantially with us,” She also used the announcement as a political platform to highlight “Regrettably, more recently investment into Australia is declining. This will badly affect tax revenue, record national debt, opportunities and living standards. As I often say, when mining does well, so do Australians, but I need to add, when mining doesn’t do well, nor do Australians. “We hence need to be very encouraging of policies that are more welcoming to investment. Other countries are certainly doing this.” The government needs to be mindful that Hancocks iron ore operations have delivered in excess of $11.5 billion in royalties and taxes and have supported many WA based SME service providers along the journey.
Our intrepid advisors Antipodean Capital produced a piece highlighting while many central banks are nearing the end of their rate cut cycle others are at the beginning. In particular, they point towards Britain (BOE), Europe (ECB) and Canada (BOC) have limited wriggle room to move while the RBA and Fed still have considerable room for further rate cuts. Despite some subdued inflation numbers from the US, they are still concerned about the inflationary (stagflation) impact of tariffs and the distortion caused by AI stocks perhaps artificially inflating the US share market. Despite mixed economic data coming out of the US they still remain fundamentally concerned as to the state of the US economy. As a result, they still remain cautious on stocks with a current defensive bias but at the same time are quick to highlight that when emerging out of a recession and a rate cut cycle bottoms out you want to own commodity based stocks in favour of defensives “. This is why our portfolio has started to skew towards this, and we suspect it will skew even more heavily to commodity, small and mid assts as we near rate cut and recession cycle end. Worth thinking about by our clients we think.”
Quote of the week….
“Full magnets, and necessary rare earths will be supplied, upfront by China. Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities (which has always been good with me!)”
DJT
On the lighter side….
School of hard rocks…
Austal Limited (ASX:ASB) rocketed up to record levels following South Korean shipbuilder Hanwha Group receiving approval from the Foreign Investment Board (CFIUS) in the United States to increase its shareholding in Austal up to 100 per cent. Upon receipt of that advice from Hanwha, Austal subsequently sought independent verification and ASB understands that the approval granted by CFIUS is different to that claimed by Hanwha. Austal is seeking written confirmation from CFIUS and will update shareholders on receipt of that information. Hanwha currently holds a 9.9 per cent equity position in Austal, and a further 9.9 per cent economic interest through a cash settled total return swap. Hanwha has applied to Australia’s Foreign Investment Review Board (“FIRB”) to increase its equity position in Austal to 19.9 per cent. That application is still under consideration by FIRB.
Delta Lithium (ASX:DLI) has formally launched the spin-off of their Mt Ida gold project via IPO Ballard Mining which is aiming to raise $25-$30mn at 25 cents.
In addition to the 80-100 million shares issued in the IPO DLI shareholders will receive one Ballard share for every 11.25 DLI shares while DLI will retain between 46% and 49% of the new company depending on the take-up of the IPO which is expected to be hotly supported.
The resulting market cap. will be $80m to $85m at 25 cents and funds will be targeted at extensional and infill drilling at Ida.
Perseus Mining (ASX:PRU) provided the market with a 5-year production outlook and costs highlighting a 5-year average annual production rate of 515,000 to 535,000 ounces pa with FY2026 production to be 420,000 to 440,000 ounces then ramping up to 610,000-630,000 ounces in FY2029.
The updated production profile is expected to produce a total of 2.6m to 2.7m ounces over this period. AISC’s have been guided between a range of $2,190 to $ 2,345 per ounce over the 5-year profile which is consistent for FY2026 but up from the FY2025 range of $1,955 to $2,000 per ounce.
Although AISC’s have increased a key positive from the multi-year outlook is mine life extensions at Edikan and Sissingue, along with greater clarity of the cost profile associated with these mine life extensions. Nothing really to see here…keep on printing the loot!
Austin Engineering (ASX:ANG) copped a knee to the nether region guiding FY2025 EBIT to $41m from a previously forecast $50m. The reason for the downgrade has been pin-pointed towards the winning of a significant customer which has required a major ramp up of their Chilean manufacturing facility which has strained the capacity of the facility. It’s important to note the potentially multi-year contract for supply of truck bodies could lead to considerable sales in the future should they deliver on the contract. As a repatriation measure ANG now intends to redirect a significant proportion of production fulfilment for this contract to its manufacturing facility in Batam. Clearly recent share price weakness has suggested this downgrade was imminent and is a disappointing end to David Singletons Executive reign who has done a fantastic job streamlining the business ahead of handover to new CEO Dick (Sy) Van Dyk on July 1.
Greatland Gold (ASX:GGP) conducted a recent site visit and feedback has been positive with another strong quarter predicted in line with guidance. Nothing like buying a project off a major with deep pockets and Newcrest spared no expense when establishing the on-site infrastructure with a 20mtpa gold plated processing facility and 135MW power station. There are a range of options open to GGP to extend the mine life at Telfer including the Central and Southern extensions, the Main Dome Underground, and West Dome Deeps meanwhile Havieron is expected to grow substantially with drilling. Canaccord are forecasting production of 83,000 ounces at around an AISC of $2,170 and Euroz expect GGP to be producing upwards of 500,000 ounces by 2032.
Rumour mongers are suggesting the second round of bidding for Bellevue Gold (ASX:BGL) sees Vault Resources (ASX:VAU) and Regis Resources (ASX:RRL) going head to head.
While VAU’s gold/copper Deflector project nears the end of it’s life, King of the Hills has proved to be a challenging project. After reportedly going through the Ravenswood sale process and not meeting the vendors price expectations. RRL are believed to be the front runner for BGL which is hundreds of millions of dollars in the red on it’s hedge book as the gold price trades rockets above $5000 an ounce, about double the level hedged at, which would be factored into the price offered by a potential suitor. BGL has been revised down FY2025 production guidance to 129,000-134,000 ounces compared to more than 150,000 ounces previously. The production outlook for the FY2025/26 is anticipated to be about 150,000 ounces and they are targeting 190,000 ounces in the 2027 to 2029 financial years.
Ora Banda Mining’s (ASX:OBM) recent production downgrade shaved some of the sparkle off their share price with their FY2025 output expected to be 5% lower and AISC’s up by 4%. OBM blamed delays in processing plant upgrades and the subsequent slower ramp up as the key drivers behind the downgrade. OBM’s flagship Davyhurst operation is now expected to produce 95,000 ounces at an AISC of $2,600/oz which is above the upper end of their guided $2,500/oz ASIC. However, operations appear to have recovered from the delayed mill shutdown, with run-rates in the month of June closer in line with a run rate of 150,000 ounces per annum for FY2026. OBM also released depth extensions from Riverina including:
5.5m @ 4.3g/t from 985m
6.2m @ 4.0g/t from 982m
Drilling below the open pit at Waihi also came up with some nice grades including.
8.7m @ 9.3g/t from 330m
The results from both Riverina and Waihi are encouraging and time will tell if this amounts to all important additional mineable ounces.
Genesis Minerals (ASX:GMD) updated the market confirming they are on track to meet guidance as well as highlighting the value and synergies of their Laverton Gold Project acquisition from Focus Minerals (FML). The project hosts a 4m ounce resource grading 1.7g/t including 547,000 ounces of reserves at 1.3 g/t plus what they believe is considerably underexplored ground and thus will prompt follow up extensional drilling. GMD is consolidating key assets in the region which is all centred around the re-energised 3mtpa Laverton Mill. GMD continues to streamline operations by pairing deposits with the most efficient processing solutions. The additional ore from Laverton will allow the company to process Tower Hill at Leonora and thus lower operating costs significantly. The presentation highlights they have acquired FML at a favourable value of $63 per resource ounce versus transaction completed at up to $165 per ounce and lies a mere 30km’s from their Laverton processing facility.
Cygnus Metals (ASX:CY5) have produced further encouraging results from their Golden Eye deposit in the greater Chibougamau Project in Quebec. Better results included:
4.3m @ 9.8g/t AuEq (7.5g/t Au, 1.6% Cu & 23.9g/t Ag)
3.3m @ 12.7g/t AuEq (8.4g/t Au, 3.1% Cu & 30.2g/t Ag)
2.5m @ 7.3g/t AuEq (5.9g/t Au, 0.9% Cu & 14.9g/t Ag)
3.3m @ 3.8g/t AuEq (3.2g/t Au, 0.4% Cu & 3.5g/t Ag)
Combining this new drilling with 77 historical holes should deliver a maiden resource for this project in the near future. The pundits seem to suggest a strike of 600 metres, 3m thick orebody at 300 metres could host an initial resource of 150,000 to 200,000 ounces grading in the 3-5g/t range with further upside. Golden Eye is 3 clicks from their processing facility.
While many juniors sit around and do SFA Gorilla Gold (ASX:GG8) are rolling up their sleeves and drilling the shizen out of their projects with 2 sets of drill results in the last week. The first lot came from their flagship Lakeview project where they have extended the King Kong lode down dip about 100 metres returning:
16m @ 3.8 g/t from 216m
16m @ 3.5 g/t from 280m
6m @ 4.4 g/t from 8m
4m @ 6.2 g/t from 148m
These are depth extensions to the current 78,000 @ 2.8g/t resource and they have now had several high-grade hits outside of the current resource which demonstrates potential for strong resource growth. The results exhibited consistent grade continuity throughout and the potential for parallel structures along with down plunge/dip extension of the main King Kong lode will be aggressively tested. The second lot came from their Mulwarrie project including:
2m @ 23.5g/t Au from 217m
5m @ 24g/t Au from 324m
The focus now really turns to their flagship Lakeview project where they will soon have 6 rigs burning their excess cash.
Who’s shaking the tin…
Eclipse Metals (ASX:EPM) - $2m at 1.5 cents
S2 Resources (ASX:S2R) - $3.5m at 7.2 cents (plus 1:2 option)
McLaren Minerals (ASX:MML) - $1m at 2.25 cents (plus 1:1 option)
Iceni Gold (ASX:ICL) - $2.5m at 12 cents (plus 1:2 option)
North Stawell Minerals (ASX:NSM) – $1.5m at 3 centsAlara Resources (ASX:AUQ) - $3.4m at 4 cents
Kinetiko Energy (ASX:KKO)?- $2.2m at 4 cents (plus 1:1 option)
Southern Palladium (ASX:SPD) - $8m at 50 cents
Ioneer (ASX:INR) - $25m at 10 cents
West Wits Mining (ASX:WWI) - $10m at 2.2 cents (plus 1:2 option)
Boab Metals (ASX:BML) - $6M AT 0.16cents
Cobre (ASX:CBE) - $500k at 4 cents
Terra Metals (ASX:TM1) - $4m at 3.5 cents
Zenith Minerals (ASX:ZNC) - $3.5m a 0.039 (Plus 1:3 option)
FMR Resources (ASX:FMR) - $2.2m @ 0.16cents
Clara Resources (C7A) - $600,000 @ 0.003cents
Australian Strategic Materials Limited (ASX:ASM) – $3M via a SPP
Another round of cracking results from….
WIA Gold (ASX:WIA)…
WIA Gold (ASX:WAI) has produced another lot of solid assays from 36 RC and 9 diamond holes as part of their ongoing program at their Kokoseb Gold Project in Namibia. Some deep diamond holes under the resource shell returned:
26m at 7.90 g/t Au from 444.0m,
10.5m at 16.72 g/t Au from 427.5m
Shallow extensional RC results in the central zone included:
16m at 2.96 g/t Au from 198m,
28m at 3.44 g/t Au from 192m
Meanwhile infill continues to produce consistent mineralisation including:
21m at 1.50 g/t Au from 83m
23m at 1.69 g/t Au from 208
45m at 1.13 g/t Au from 66m
28m at 1.06 g/t Au from 127m
20m at 1.13 g/t Au from 51m
A clear path here where the current 2m ounce resource could foreseeably expand to 2.5m to 3m ounces with a resource upgrade due this month and another a catalyst being the scoping study due out in the September quarter.
PS Our usual scribe for this segment is swanning around Europe somewhere!